Markets closed before President Donald Trump announced a “total ceasefire” in what he referred to as the “12-day war” between Iranians and Israelis.
Investor anxiety escalated significantly yesterday following the weekend U.S. attack on Iran. Oil experienced a volatile trading session, copper reached its highest level in over a year, and the dollar approached 950 pesos. The session concluded with a ceasefire between Israel and Iran, announced after markets had closed.
The U.S. bombing of Iranian nuclear facilities marked “a critical shift in the geopolitical landscape: the world’s greatest power has directly entered the conflict,” noted investment bank Julius Baer, highlighting the alarm triggered by U.S. involvement and its potential effects on global oil prices.
Nonetheless, President Donald Trump publicly demanded—in his characteristic style—that crude oil prices be brought down, amid fears that the Middle East escalation and supply disruptions could prolong recent increases in oil markets. “Everyone, keep oil prices low! I’m watching! You’re playing into the enemy’s hands. Don’t do it!” Trump posted on social media.
Brent crude, the global benchmark, surged to US$81 per barrel in early trading yesterday but dropped sharply to US$71.48 following Iranian strikes on a U.S. base in Qatar that caused no damage or casualties. This “stabilizing” trend may continue in the wake of the “total ceasefire” announced later that afternoon by Trump, who dubbed the episode the “12-day war” between Iran and Israel.
The Value of Hormuz
Tehran’s retaliatory action in Qatar was perceived by markets as limited, given that it caused no damage to energy infrastructure or regional oil supply. Subsequent press reports indicated that Iran had notified Qatari authorities in advance of the attacks, a move seen by investors as a signal of de-escalation.
Nevertheless, concerns persist regarding the potential blockade of the Strait of Hormuz. Analysts agree that such a move would trigger a significant surge in oil prices, pushing them above the US$100 per barrel threshold.
The Iranian Supreme National Security Council has yet to respond to a parliamentary request to block the Strait of Hormuz. “A full blockade would also harm Iran, due to its reliance on crude exports to Asia, but asymmetric attacks on ships or terminals remain a very real possibility,” warned StoneX market analyst Fawad Razaqzada.
Copper and the Dollar
Amid market jitters, copper prices—the top export of Chile—increased nearly 1%, reaching US$4.55 per pound on the London Metal Exchange, the highest in 13 months.
The U.S. strikes in Iran over the weekend “initially provoked a defensive reaction in markets, lifting oil, gold, and base metals. Although tensions eased somewhat in the hours that followed, copper managed to maintain its gains, partly due to its strategic nature in the face of potential global logistics disruptions,” stated Juan Carlos Guajardo, director of Plusmining.
He added that the rise in copper prices is not only tied to a tight supply environment and robust
demand, but also to growing perceptions of geo-strategic vulnerability and trade distortions
that favor stable suppliers such as Chile. “In this context, copper reinforces its profile as a
strategic asset and a store of industrial value,” Guajardo concluded.
Despite copper’s gains, increased risk aversion contributed to the dollar climbing nearly 3 pesos to 948 pesos in the local foreign exchange market.
Source: El Mercurio